The government plans to borrow Rs 12 lakh crore ($160 billion) in the fiscal year to March 2021, up from the previously budgeted Rs 7.8 lakh crore to cushion the blow from the new coronavirus pandemic, it said on Friday.

The “revision in borrowings has been necessitated on account of the COVID-19 pandemic”, the government and the Reserve Bank of India said in two separate releases.

The government will now borrow Rs 30,000 crore via a sale of bonds each week, sharply higher than the Rs 19,000 crore- Rs 21,000 crore scheduled as per the calendar released at end-March.

“The upward revision in borrowings for the remainder of FY2021, although sharp, was inevitable given the estimated extent of revenue loss following the lockdowns related to the COVID-19 pandemic,” said Aditi Nayar, principal economist at ICRA.

The country is in a lockdown for eight weeks, causing massive economic losses and prompting Moody’s to forecast a 0 per cent growth for this year.

Traders said bond yields are likely to open sharply higher on Monday if there is no announcement from the central bank on how it plans to support this borrowing program.

“The announcement though expected has come a bit early. Market reaction depends on what the RBI does,” said A. Prasanna, economist with ICICI Securities Primary Dealership.

“Else we could see a 25 bps selloff on Monday and then further sell off. But RBI has two days to manage this.”

Several traders too agreed the market would open a minimum 10-15 basis points higher on Monday. Earlier in the day, the existing benchmark 10-year bond yield closed 6 bps lower at 5.97 per cent, its lowest level since Jan. 27, 2009.

The government sold a new 10-year paper at 5.79 per cent at an auction amid aggressive buying by state-run banks but the bullishness was likely to wane following the higher borrowing announcement.

Market participants are also eagerly awaiting the announcement of a second stimulus package from the government to gauge the extent of fiscal slippage that may happen.

“Higher borrowings are likely to push up yields, unless OMOs (open market operations) or other instruments are deployed by the RBI to absorb a part of the higher issuance, and crowd out borrowings by state governments and corporates,” Ms Nayar said.

“However, less pressure on expenditure compression to offset the expected revenue shortfall, would allow economic activity to display some semblance of recovery in the latter part of this fiscal year.”